Tobacco in Colombia

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Executive Summary

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In 2016 tobacco sees decline in volume

Tobacco products registered volume drops in 2016 despite anti-tobacco legislation remaining unchanged. The smoking population continued to contract, mainly due the efforts of the authorities in prevention programmes to discourage young generations from starting to smoke, and the limited visibility and advertising restrictions. In addition, the social stigma and smoking bans in public places are causing people to smoke less.

Tobacco companies enter to compete in vapour products

Vapour products have been present in Colombia since 2009, and were mainly imported products, manufactured by non-tobacco companies and with a highly fragmented market. As traditional cigarettes have been experiencing declines as health concerns regarding the negative effects not only for smokers but regarding second-hand smoke continue to rise, tobacco companies have been developing less harmful smoking alternatives. British American Tobacco launched in Colombia the Vype ePen at the end of 2015, a non-cig-a-like closed vapour system that is highly visibly due to advertising and presence in modern retailers and convenience stores.

Competitive landscape remains unchanged

Tobacco products are dominated by cigarettes, where there is a duopoly led by Cía Colombiana de Tabaco (Coltabaco), a subsidiary of Philip Morris, supported in the wide presence of brands such as Boston, Green and Marlboro, which together hold a significant share of the market. British American Tobacco for its part was able to maintain volume sales, supported by innovation and improved distribution. In other categories, such as cigars and smoking tobacco, imported products continue to dominate.

Independent small grocers remains largest distribution channel

Independent small grocers remains the largest distribution channel, due to its ability to reach all income segments, and being located close to homes and work places. Modern retailers account for a small volume share and remained quite steady over the review period. Tobacco specialists and internet retailing represent a small proportion of sales, but are more important for cigars and smoking tobacco, with the latter crucial in the development of vapour devices.

Tobacco expected to see continued declining trend in volume sales

In coming years demand for tobacco products will continue to shrink. The restrictive regulations for tobacco, the strong increase in taxes that begin to rule in 2017, and which will have a stronger impact on cigarette brands in the economy segment, combined with an expected reduction in smoking prevalence, will continue to push sales. Vapour products, meanwhile, are expected to see rapid growth, as there is still no regulation on such products, and tobacco companies already make inroads in Colombia.

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